Dbriefstmtoutlook201702082017 170209183237 PDF

TMT outlook 2017:
A new wave of advances offer opportunities and challenges

The Technology, Media and Telecommunications series
Sandra Shirai. Principal, Deloitte Consulting LLP
Scott Lippstreu, Principal, Deloitte Consulting LLP
Paul Sallomi, Partner, Deloitte Tax LLP
Craig Wigginton, Partner, Deloitte & Touche LLP
February 8, 2017
Media and
entertainment outlook
Scott Lippstreu,
Deputy US Media and Entertainment
Practice Leader
Deloitte Consulting LLP
Copyright © 2017 Deloitte Development LLC. All rights reserved. TMT outlook 2017: 2
Millennials spend more time streaming content than watching
live television
Live
programming 30% 29% 28%
Streaming
32% 38% 31%
14–18 19–25 26–32
Deloitte’s Digital Democracy Survey, 10th Edition, 2016

Millennials aged 19-25 spend more time watching content on
devices other than TVs
Movies TV shows
Other devices Other devices
10% 9%
Smartphone
44% Smartphone
44% Television
56% 8%
Television 56% 8%
Tablet
Tablet
39%
38% Laptop/
Laptop/ desktop
desktop

Streaming services are growing rapidly, especially among Millennials
Average number of paid video

subscription services by generation
46%
of US consumers
& 61%
of Millennials
Two Two
subscribe to a
14–18 33–49
streaming video service
Two Two
19–25 50–68
Three One
26–32 69+

Millennials value their streaming video subscriptions more than Pay TV
Home Internet Pay TV Streaming Video Services
95% 79% 61%

of US consumers of US consumers of US consumers
92% 94% 94% 64% 61% 68% 66% 78% 56%
14–18 19–25 26–32 14–18 19–25 26–32 14–18 19–25 26–32

Traditional Pay TV packages are losing their appeal with
consumers as alternative models gain ground
49%
Only channels I watch
39%
Traditional package
of channels

What does this mean?
Poll question #1
How many activities do you typically engage in while watching TV?

• One
• Two
• Three
• Four
• Five or more
• Don’t know/don’t multitask while watching TV
Consumers pay more attention to digital ads than TV ads and
Millennials are the most distracted while watching TV
Average number of
additional activities
while watching TV
69% & 77%
of US consumers of Millennials Four
Pay more attention to Millennials
digital ads over TV ads

The buying influence of online reviews in social media has surpassed TV
ads for 19-32 year olds
73%
Online reviews within
39%
Television advertising
social media circle

VR/AR and the
Future of Mobility
Poll question #2
Do you own a VR headset?
• Yes
• No
• No, but I plan to purchase one in the next 12 months
• No, but I might purchase when more content is available
• I don’t know what a VR headset is
Technologies driving change in Media & Entertainment
Virtual Reality Future of Mobility
Telecom Auto
Media Tech
As of October 2015, 234 companies working In the US, roughly 160 million hours are
on VR had raised a total of $3.8 billion in spent driving from point A to B annually.1
capital according to VentureBeat, with a That’s 46 minutes per person, every day.
combined market value of $13 billion.
1AAA 2015 Driving Survey

Telecommunications
Outlook
Craig Wigginton, US and Global
Telecommunications Leader
Deloitte & Touche LLP
Today’s Coverage of 2017 Telecom Outlook Items
Media usage Mobile Smartphone

on phones IoT advertising addiction
Digital
Second-Hand Content-
Trans-
Phones Based Telcos
formation
Phone
Privacy and
purchase Biometrics M&A
security
channels
Mobile Virtual
Connectivity Apps
Reality
Mobile Mobile Smartphone

operators Wearables
payments brand loyalty
Smartphone
SDN/NFV Data privacy
Hub
Enterprise
5G Device usage Small Cells
Mobility

Device usage
Nearly 50% of consumers surveyed look at their phone within 5
minutes of waking up. At night, consumers are slightly less
phone-tethered
Typically how long is the interval between At the end of the day, typically how long is
waking up and looking at your phone for the interval between looking at your phone
the first time? for the last time and preparing to sleep?
17% Immediately 18% 12% Immediately 15%
41% Within 5 minutes 43% 32% Within 5 minutes 35%
88% Within an hour 88% 79% Within an hour 81%
93% Within 2-3 hours 93% 87% Within 2-3 hours 89%
Longer than 3 96% Longer than 3

96% 97% 95%
hours hours
2015 2016 2015 2016
Source: USA edition, Deloitte Global Mobile Consumer Survey

Base: Smartphone owners 2014: 2015: 1,458, 2016: 1,530
The 18-24 year old age group still dominates when it comes to
how many times a phone is looked at in a given day
How many times would you estimate you look at your phone in a day?
35% 32%
30% 27% 27%
25%
25% 21% 21% 21% 21%
20% 16%
15% 13%14%
10%
10% 6% 7% 6% 6% 5%
4% 3% 4% 4% 4%
5% 2% 1%
0%
Never Under 10 times Between 11 and Between 26 and Between 51 and Between 101 Over 200 times I don't know
25 times 50 times 100 times and 200 times
2014 2015 2016
90 84 82 With approximately 200 million

80 smartphone users in the U.S., this
70 66 64 means we look at our smartphones
58 nearly 9 billion times per day!
60 51
46 47 44 44
50
40 33 32 35
30
30 24 22 20 19
20 16 16
12
10
-
Total 18-24 25-34 35-44 45-54 55-64 65-74
2014 2015 2016

Source: USA edition, Deloitte Global Mobile Consumer Survey, June 2016
Base Graph 1: Smartphone owners 2014: 2015: 1,458, 2016: 1,530
# of Smartphones Source: Statista, 2015
Surprisingly, ½ of consumers check their phones in the middle of
the night. Reasons vary, but they’re primarily personal activities
Which of the following activities do you do if you check your phone in the middle of the night?
Check the time 31%
Check instant messages 20%
Check social media notifications 19%
Check for personal emails 16%
Play games 16%
Respond to instant messages 13%
Read work email 11%
Read news 11%
Check games notifications 8%
Read a book 8%
Respond to personal emails 7%
Check other apps 7%
Respond to work email 7%
Don't know 1%
I don't check my phone during the night 50%
0% 10% 20% 30% 40% 50% 60%
Source: UK edition, Deloitte Global Mobile Consumer Survey, May - Jun 2016
Base: All smartphone owners 1530
Penetration in the smartphone market continues to increase,
particularly for the older age group demographics
Which, if any, of the following devices do you own or have ready access to?
Smartphone penetration by age group

100% 25%
89% 88%
90% 21%
85% 86% 84%
21%
80% 77% 76% 77% 20%
75%
72%
70%
70% 64% 65%
62%
Penetration rate
58% 15%
Growth rate
60% 15% 15%
53%
51%
50%
42%
40% 10%
9%
30% 8%
20% 5%
10%
0% 0%
Total 18-24 25-34 35-44 45-54 55+
2014 2015 2016 CAGR
Source: Deloitte Global Mobile Consumer Survey, USA edition, Aug 2014, August 2015, August 2016
Base: All respondents USA, 2014: 2001, 2015: 2069, 2016: 2000
Biometrics
Prints charming:
Biometric security reaches the billions
Mainstream adoption of smartphone biometrics will act as
a catalyst for the deployment of biometric sensors in
other environments
Schools
• Access to building
• Register exit
• Check in and out of classes
• Payment of food and stationery supplies
Financial institutions
• Fraud detection, access to or opening of new accounts,
payment authorization
• Alternative to PIN entry in ATMs
• Authorization process for high value B2B transfers
Government
• Tax payments, access to medial records, e-voting (might encourage
younger people to vote)
• National identity schemes
• India: facial, fingerprint and iris data; 2016: 1 billion registrants.
Enterprises
• Access to data
• Alternative to entering a password to get access to email or intranet
• Physical security: a way of controlling entry into a building

Polling Question #3
How important would a faster wireless network (such as 5G)

be to you?
• Very Important — Today’s 4G speeds simply aren’t fast enough
• Fairly Important — 4G is okay, but I could use faster speeds
• Not Very Important — 4G speeds are sufficient most of the time
• Not At All Important — Today’s network meets all of my needs
• Don’t know/Don’t understand
Future of connectivity
In 2017, we expect to see continued progress toward 5G rollout
through completing market trials and beginning initial full-scale
market rollouts
What 5G Offers
‫‏‬
Higher capacity: LTE-A Pro offers 10 times

the capacity of the fist 4G standard.
• Smaller cells – Allows for base stations
to be placed in stores in shopping malls,
lamp posts
• Carrier aggregation
• MIMO
• Greater capacity edges and hot-spots
• Higher frequency bands/higher speeds
Lower latency:
• LTE-A Pro – 600 microseconds
• LTE – 8,000 microseconds
Dedicated support for IoT: Low-Power Wide

Area Network – low bandwidth connections to
a large number of smaller, connected devices
• low-power transmission
• low-frequency transmission (for
basements and inside buildings)
Based on Deloitte’s 2016 Global Mobile Consumer Survey, more
than half of consumers believe 5G to be important. Specific
demographics have even greater levels of interest in 5G.
If your carrier offered next generation wireless data speeds (e.g. 5G) how important would this be for you?
Top interested demographics
6% % Diff from
14%
Category Value Next Highest
27%
Age Group
Age 25-34 19%
Region Northeast 4%
24%
Couple with
Household 8%
29% children
Bought
2016 17%
phone in…
Very important Fairly important

Income $250K-$299K 9%
Not very important Not at all important
Don't know Connected car
IoT
& wearables 9%
ownership
Source: US edition, Deloitte Global Mobile Consumer Survey (tie)
Base: All Adults, 18-75
Small Cells: Big impact on seamless connectivity
Why small cells now? Evolving organizational capabilities
Achieving advances in capacity and network The processes and tools for overseeing conventional network
speed will require densification of networks deployment and rollout might not work so effectively in the new era of
consistent with a 5G strategy over both licensed small cells.
and unlicensed spectrums—to patch coverage
holes, to optimize signal strength, and to 2019
increase capacity to meet consumer demand. $10 billion A diverse and potentially new
set of capabilities will be
Globally 10+million Small Cells needed, from such as process
have been deployed so far. automation, mobile apps to
support field workers,
regulatory processes, and real-
The demand for network densification is only time performance monitoring
going to increase exponentially in the future. 2014 and analytics, just to name a
Small cell equipment market revenue was $2 billion few.
around $2 billion in 2014 and is expected to
approach $10 billion by 2019.
Impact on network design How innovation helps

Shifting from‫‏‬a‫“‏‬macro‫‏‬tower‫‏‬only”‫‏‬mindset‫‏‬to‫‏‬a‫“‏‬connect‫‏‬everything”‫‏‬ Small cells offer the potential of providing speeds that pave the way for
mindset will require looking beyond conventional ways of thinking wireline broadband substitution and enable the creation of a mesh network,
about network design and engineering, site selection, and deployment. offering direct connectivity to the rapidly growing number of Internet of Things
(IoT) devices.
Small Cell Deployed on
Traffic Light Poles
Electric Poles
Street Lights
29 Meeting with incoming RBC US General Counsel Copyright © 2015 Deloitte Development LLC. All rights reserved.
Technology Outlook
Paul Sallomi, US and Global Technology Industry
Leader
Deloitte Tax LLP
Tech outlook 2017
Exponential technologies, flexible consumption business models, cyber security and

ecosystem partnerships offer a continued set of opportunities and transformational
challenges for technology companies
Flexible Consumption Model offerings will have significant impact on tech

companies and their customers and will drive tremendous business and operating
model transformation
Cognitive Computing will enhance a wide array of enterprise and

consumer applications
Digitization of the enterprise will open new markets and create new
ecosystems
Cyber Security products and services are addressing the increasing threat
of attacks
New partnerships and collaborations across tech and other industries are
critical for driving topline growth
Mergers, Acquisitions, & Divestitures are on the rise as tech companies

choose to focus on what they do best
Polling question #4
Which trend do you predict will drive the largest growth

opportunity in the tech market?
• Cognitive computing
• Cyber security advancement
• Automatic Emergency Brakes/Automotive technologies
• It-as-a-Service/Flexible Consumption models
• Mergers, Acquisitions, & Divestitures
• Don’t know/Not applicable
IT-as-a-Service: the half trillion dollar ‘niche’
Deloitte Global predicts by the end of 2018, spending on IT-as-a-
Service for data centers, software and services will be just under
$550 billion worldwide. IT-as-a-Service is the fastest growing
example of Flexible Consumption Models
A subset of flexible consumption models, potentially able to procure every aspect of IT on

a “you get what you pay for’ basis.
13% of companies using FCM for 23% of companies using FCM for
more than half of their IT needs more than half of their IT needs
IT-as-a-Service: the half trillion dollar ‘niche’
Adoption varies in a number of ways
Who it is that makes the decision to move to the alternative model seems to depend on the industry:
Healthcare
Industrial products In other industries the change is

IT departments led by the vendor:
Financial Services initiate the move Media and entertainment

13% of companies moved on their
Technology own initiative.
33% of companies moved because
31% of companies moved on of pressure from vendors.
their own initiative.
8% of companies moved because
of pressure from vendors.
Enterprise size also plays a role:

$1-5 billion revenue +$5 billion revenue
Public cloud 7% 7%
On premise 19% 32%
Brains at the edge: machine learning goes mobile
Deloitte Global predicts that over 300 million smartphones (more
than a fifth of units sold in 2017) will have on-board neural
network machine learning capabilities.
Computer models that mimic aspects of the human brain’s structure and function
Allows smartphones
to perform machine
learning tasks
Brains at the edge: machine learning goes mobile
The technology behind it
CPUs GPUs Machine learning on-the-go

(central (graphic will not be limited to
processing processing
units) units)
smartphones.
Neural Mobile phones are

networks becoming critical devices in
that fit
smartphones our daily lives, and need to
be able to perform machine
learning tasks all the time.
FPGAs
Special
(field-
software
programmable
emulators
gate arrays)
Safety first: the road to self-driving starts with a stop
Deloitte Global estimates that, by 2022, a sixth of the US cars and light
trucks will be equipped with automatic emergency braking (AEB).
AEB will contribute to a reduction of annual US motor vehicle fatalities by 6,000.
16% decline on the

likely death toll as
compared to 2017
Forward-facing cameras Millimeter wave radars
AEB technologies
Laser ranging and imaging systems (LIDAR) Associated vision processing systems
Safety first: the road to self-driving starts with a stop
The bottom line
• AEB is a critical first step towards the fully autonomous vehicle

• Technology sector stands to benefit with wider deployment
− Automotive semiconductor market growing faster than rest of chip market at 6%
annually until 2019
• AEB will not require rewriting laws, regulations and liability
− It could be a successful transition technology
• Telecom implications: cars in 2020 may be connected to the network or to other cars
generating 0.6 exabytes per month in the US or 9% of all wireless traffic
DDoS attacks enter the terabit era
Deloitte Global predicts that in 2017 Distributed Denial-of-Service (DDoS) attacks will
become larger in scale, harder to mitigate and more frequent.
1 Tbit/s attacks per month
+10 million attacks in total
Average attack size of 1.25 – 1.5 Gbit/s

(enough to take many organizations offline)
DDoS attacks enter the terabit era
The bottom line
Organizations increasing its dependence on the Internet should be aware of a potential spike
in the impact of DDoS attacks
They should consider a range of options to mitigate the impact:
• Decentralizing
• Bandwidth oversubscription
• Testing
• Dynamic defense
• Fallbacks
• Protecting
• Detecting
• Repelling
DDoS attacks are likely to increase in intensity in 2017 and beyond
Partnerships, M&A and Divestiture Activity
The new growth strategy
Efforts to advance new technology fields

and build end-to-end customer solutions
are driving:
• Unprecedented wave of partnerships between

technology companies and other industries
• New forms of consortiums and collaborations
• Partnerships between traditional competitors in
emerging fields
• Increased M&A and divestiture activity
Companies that are open and adept at this type of

teaming or restructuring will be able to find a
broader network of growth opportunities for their
products and services
Question and answer
Join us April 26 at 1 p.m. ET as our
Technology, Media & Telecommunications
series presents:
Media consumption trends:

Multigenerational perspectives
and implications
Eligible viewers may now download
CPE certificates.
Click the CPE icon in the dock at the

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Contact information
Sandra Shirai Paul Sallomi

Principal Partner
Deloitte Consulting LLP Deloitte Tax LLP
sshirai@deloitte.com psallomi@deloitte.com
Connect with me on LinkedIn Connect with me on LinkedIn
Scott Lippstreu Craig Wigginton

Principal Partner
Deloitte Consulting LLP Deloitte & Touche LLP
slippstreu@deloitte.com cwigginton@deloitte.com
Connect with me on LinkedIn Connect with me on LinkedIn
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TMT outlook 2017:

A new wave of advances offer opportunities and challenges

14–18 19–25 26–32

Deloitte’s Digital Democracy Survey, 10th Edition, 2016

Other devices Other devices

Deloitte’s Digital Democracy Survey, 10th Edition, 2016

Average number of paid video

Deloitte’s Digital Democracy Survey, 10th Edition, 2016

Home Internet Pay TV Streaming Video Services

95% 79% 61%

14–18 19–25 26–32 14–18 19–25 26–32 14–18 19–25 26–32

Deloitte’s Digital Democracy Survey, 10th Edition, 2016

Deloitte’s Digital Democracy Survey, 10th Edition, 2016

How many activities do you typically engage in while watching TV?

Deloitte’s Digital Democracy Survey, 10th Edition, 2016

Deloitte’s Digital Democracy Survey, 10th Edition, 2016

Do you own a VR headset?

Virtual Reality Future of Mobility

1AAA 2015 Driving Survey

Media usage Mobile Smartphone

Mobile Mobile Smartphone

Deloitte’s Digital Democracy Survey, 10th Edition, 2016

17% Immediately 18% 12% Immediately 15%

41% Within 5 minutes 43% 32% Within 5 minutes 35%

59% Within 15 minutes 62% 50% Within 15 minutes 54%

73% Within 30 minutes 76% 64% Within 30 minutes 68%

88% Within an hour 88% 79% Within an hour 81%

Longer than 3 96% Longer than 3

2015 2016 2015 2016

Source: USA edition, Deloitte Global Mobile Consumer Survey

2014 2015 2016

90 84 82 With approximately 200 million

2014 2015 2016

Check the time 31%

Check instant messages 20%

Check social media notifications 19%

Check for personal emails 16%

Play games 16%

Respond to instant messages 13%

Read work email 11%

Read news 11%

Check games notifications 8%

Respond to personal emails 7%

Check other apps 7%

Respond to work email 7%

I don't check my phone during the night 50%

0% 10% 20% 30% 40% 50% 60%

Base: All smartphone owners 1530

Smartphone penetration by age group

2014 2015 2016 CAGR

Deloitte’s Digital Democracy Survey, 10th Edition, 2016

How important would a faster wireless network (such as 5G)

Higher capacity: LTE-A Pro offers 10 times

Dedicated support for IoT: Low-Power Wide

Top interested demographics

Age 25-34 19%

Very important Fairly important

Impact on network design How innovation helps

Exponential technologies, flexible consumption business models, cyber security and

Flexible Consumption Model offerings will have significant impact on tech

Cognitive Computing will enhance a wide array of enterprise and

Mergers, Acquisitions, & Divestitures are on the rise as tech companies

Which trend do you predict will drive the largest growth